WEBVTT - At the Money: Want to Fly Private? Here is how!

0:00:09.000 --> 0:00:14.880
<v Speaker 1>Eaving home on the road down before.

0:00:16.400 --> 0:00:21.320
<v Speaker 2>Riding along on the speed jen I've in begging about.

0:00:23.680 --> 0:00:28.000
<v Speaker 2>Flying private was once the province of billionaires, but that's

0:00:28.080 --> 0:00:32.440
<v Speaker 2>no longer true. Sure, the top point one percent can

0:00:32.520 --> 0:00:35.760
<v Speaker 2>drop fifty large buying their own jet, but there are

0:00:35.840 --> 0:00:39.280
<v Speaker 2>many other ways to fly private beyond owning your own

0:00:39.280 --> 0:00:45.200
<v Speaker 2>gulf Stream. There's fractional ownership, hourly charter jet cards, membership,

0:00:45.240 --> 0:00:48.839
<v Speaker 2>and leases. Those are another way to go. Let's explore

0:00:48.880 --> 0:00:52.680
<v Speaker 2>this by speaking with Preston Hollins. He's the founder of

0:00:52.800 --> 0:00:58.320
<v Speaker 2>Prestige Aircraft Finance, hosts a weekly private aviation podcast called

0:00:58.680 --> 0:01:01.880
<v Speaker 2>the vip Set, and he's the author of the newsletter

0:01:02.240 --> 0:01:07.040
<v Speaker 2>Private Jet Insider, providing advice and strategies to help clients

0:01:07.120 --> 0:01:12.880
<v Speaker 2>navigate private aviation. So Preston, let's start with the basics.

0:01:13.280 --> 0:01:16.440
<v Speaker 2>Besides bringing my dogs on the plane, what's the main

0:01:16.520 --> 0:01:20.679
<v Speaker 2>reason people fly private? What are the benefits and drawbacks

0:01:21.000 --> 0:01:22.000
<v Speaker 2>of private aviation?

0:01:23.440 --> 0:01:26.760
<v Speaker 1>Very The one thing that you cannot buy more of

0:01:27.319 --> 0:01:30.520
<v Speaker 1>is time. They say that money can buy anything in

0:01:30.560 --> 0:01:34.120
<v Speaker 1>the world except for more time. I want to challenge

0:01:34.160 --> 0:01:37.679
<v Speaker 1>your audience to say there that is almost true until

0:01:37.760 --> 0:01:41.039
<v Speaker 1>you start talking about private aviation. Private aviation is the

0:01:41.080 --> 0:01:44.000
<v Speaker 1>only way to buy your time back using dollars and

0:01:44.000 --> 0:01:48.400
<v Speaker 1>actually getting time back. Time is the number one differentiator

0:01:48.440 --> 0:01:50.640
<v Speaker 1>when it comes to find private. You go to a

0:01:50.680 --> 0:01:54.400
<v Speaker 1>different part of the airport, you skip security, you drive

0:01:54.480 --> 0:01:56.920
<v Speaker 1>up to the airplane, get on and take off, and

0:01:57.080 --> 0:02:00.760
<v Speaker 1>oftentimes you're even going to an airport it is closer

0:02:00.800 --> 0:02:04.280
<v Speaker 1>to your destination than the commercial airport is. So time

0:02:04.360 --> 0:02:08.560
<v Speaker 1>is the biggest differentiator now. Is it's private, you don't

0:02:08.560 --> 0:02:11.280
<v Speaker 1>have to deal with a lot of other people. There's

0:02:11.320 --> 0:02:13.720
<v Speaker 1>some health benefits that come to it because you're not

0:02:13.760 --> 0:02:16.160
<v Speaker 1>being exposed to so many people. But at the end

0:02:16.240 --> 0:02:18.680
<v Speaker 1>of the day, it is time that you're buying back.

0:02:18.680 --> 0:02:19.720
<v Speaker 1>That is the biggest difference.

0:02:20.120 --> 0:02:23.040
<v Speaker 2>So there are obviously a lot of key differences between

0:02:23.120 --> 0:02:27.919
<v Speaker 2>flying private and commercial. Time saving is one. You're avoiding

0:02:28.080 --> 0:02:31.000
<v Speaker 2>crowds and lines. What are some of the other benefits

0:02:31.040 --> 0:02:32.160
<v Speaker 2>of flying private.

0:02:32.400 --> 0:02:36.280
<v Speaker 1>It's really that the airplane moves on your time. So

0:02:36.320 --> 0:02:38.000
<v Speaker 1>if you think about the last time that you have

0:02:38.120 --> 0:02:41.639
<v Speaker 1>to rush out of a meeting to get to the airport,

0:02:41.720 --> 0:02:44.040
<v Speaker 1>and you need it to because your flight left at

0:02:44.080 --> 0:02:47.200
<v Speaker 1>six h four pm, that plane is leaving whether you

0:02:47.280 --> 0:02:49.160
<v Speaker 1>get there or not. If you've ever had the experience

0:02:49.200 --> 0:02:51.920
<v Speaker 1>of the last minute you're rushing on and you're running

0:02:51.960 --> 0:02:55.000
<v Speaker 1>down the airport. I live close to Atlanta, Georgia, and

0:02:55.080 --> 0:02:58.040
<v Speaker 1>so I have had that experience many times in which

0:02:58.040 --> 0:03:00.919
<v Speaker 1>I'm running through Hartsfield Jackson and trying to get onto

0:03:00.919 --> 0:03:02.800
<v Speaker 1>the plane because i had a meeting that went long

0:03:03.120 --> 0:03:06.120
<v Speaker 1>and I'm trying to get there. Prive deviation is different.

0:03:06.160 --> 0:03:09.200
<v Speaker 1>The plane does not leave without you, and so it

0:03:09.240 --> 0:03:14.280
<v Speaker 1>really creates maximum flexibility. It also increases a lot of

0:03:14.280 --> 0:03:17.520
<v Speaker 1>your ability to de stress. Right, you don't have kind

0:03:17.520 --> 0:03:21.079
<v Speaker 1>of that stressful moment leading up to getting on the airplane.

0:03:21.200 --> 0:03:23.840
<v Speaker 1>Catering you get to pick what type of food is

0:03:23.880 --> 0:03:26.080
<v Speaker 1>on the airplane. You don't have to say, you know,

0:03:26.160 --> 0:03:29.440
<v Speaker 1>cookies or pretzels. You can say I want both, and

0:03:29.480 --> 0:03:32.280
<v Speaker 1>I actually want homemade cookies and I want real pretzels

0:03:32.280 --> 0:03:35.760
<v Speaker 1>and an actual big bag. A lot of people want

0:03:35.800 --> 0:03:40.119
<v Speaker 1>to try and make the justification from a dollar standpoint.

0:03:40.120 --> 0:03:42.680
<v Speaker 1>They say, okay, I value my time at one thousand

0:03:42.720 --> 0:03:44.440
<v Speaker 1>dollars an hour. Let's say I'm an attorney, and you

0:03:44.440 --> 0:03:47.120
<v Speaker 1>can actually put a dollar amount on how many billable

0:03:47.160 --> 0:03:50.040
<v Speaker 1>hours that you have if you and you say Okay,

0:03:50.280 --> 0:03:52.600
<v Speaker 1>my first class ticket's going to be one thousand dollars,

0:03:52.640 --> 0:03:55.560
<v Speaker 1>and so therefore, when can I kind of justify the

0:03:55.600 --> 0:03:59.120
<v Speaker 1>difference between first class and flying private. It's a tough

0:03:59.120 --> 0:04:02.920
<v Speaker 1>comparison when you think about all of the additional fringe

0:04:02.960 --> 0:04:05.680
<v Speaker 1>benefits that come with flying private. If you just try

0:04:05.720 --> 0:04:08.680
<v Speaker 1>and do a cost calculation, you're never going to get there.

0:04:08.880 --> 0:04:12.520
<v Speaker 1>It's never going to make sense to fly private. Probably

0:04:12.600 --> 0:04:14.480
<v Speaker 1>ninety nine percent of the time. There is the one

0:04:14.600 --> 0:04:18.440
<v Speaker 1>percent fringe time where you're going to Nantucket and there's

0:04:18.640 --> 0:04:21.360
<v Speaker 1>six of you and maybe everybody's going to fly first class,

0:04:21.400 --> 0:04:23.360
<v Speaker 1>and maybe you can kind of make it make sense

0:04:23.400 --> 0:04:26.159
<v Speaker 1>on a turboprop, but if you really boil it down,

0:04:26.400 --> 0:04:29.200
<v Speaker 1>it's never going to net out from a cost dollar standpoint.

0:04:29.520 --> 0:04:31.640
<v Speaker 1>But really what it is is it's all those fringe

0:04:31.640 --> 0:04:35.520
<v Speaker 1>benefits that come from flying private that you really can't replace.

0:04:35.760 --> 0:04:40.120
<v Speaker 2>Since you brought up meetings and other related things, I'm

0:04:40.120 --> 0:04:44.680
<v Speaker 2>curious how much of private jet usage is business travel

0:04:44.920 --> 0:04:48.920
<v Speaker 2>and how much of it is recreation vacation fund travel.

0:04:49.200 --> 0:04:51.640
<v Speaker 1>It depends on the demographic that you're looking at. I

0:04:51.640 --> 0:04:54.400
<v Speaker 1>think one big missnomer that is out there is that

0:04:54.560 --> 0:04:57.640
<v Speaker 1>private jets are reserved for Kim kardashing and Justin Bieber.

0:04:57.760 --> 0:05:01.200
<v Speaker 1>You look at how the public perceives private aviation, it's

0:05:01.240 --> 0:05:04.880
<v Speaker 1>celebrities flying to Vegas going on a party. They've got

0:05:04.920 --> 0:05:08.800
<v Speaker 1>all of their friends there. But really the bulk majority

0:05:08.800 --> 0:05:13.200
<v Speaker 1>of private aviation actually looks like main street businesses that

0:05:13.279 --> 0:05:17.120
<v Speaker 1>have multiple locations a lot. In manufacturing, for instance, you

0:05:17.200 --> 0:05:20.040
<v Speaker 1>think about just in time manufacturing, and you think about

0:05:20.240 --> 0:05:24.120
<v Speaker 1>uptime in a manufacturing plant, and if private aviation can

0:05:24.200 --> 0:05:27.200
<v Speaker 1>make sure that your plant is staying online for longer,

0:05:28.040 --> 0:05:30.839
<v Speaker 1>that can be worth millions of dollars an hour to

0:05:30.920 --> 0:05:33.960
<v Speaker 1>a manufacturing plant. So private aviation a lot of times

0:05:34.040 --> 0:05:36.520
<v Speaker 1>looks a lot different than what you think if you

0:05:36.600 --> 0:05:38.640
<v Speaker 1>look at like a per hour basis. As you kind

0:05:38.640 --> 0:05:41.520
<v Speaker 1>of broke it down, the majority is for business. Now,

0:05:41.560 --> 0:05:44.040
<v Speaker 1>if you own an aircraft and you want to take

0:05:44.080 --> 0:05:46.919
<v Speaker 1>depreciation benefits, it needs to be fifty one percent. This

0:05:47.040 --> 0:05:49.560
<v Speaker 1>is not tax advice, but that is all of my

0:05:49.640 --> 0:05:51.560
<v Speaker 1>tax friends say it's got to be fifty one percent.

0:05:51.640 --> 0:05:54.719
<v Speaker 1>Use if you want to get that depreciation. But oftentimes

0:05:54.760 --> 0:05:57.880
<v Speaker 1>it really is used a lot for business. Now you

0:05:57.920 --> 0:05:59.960
<v Speaker 1>can use it for private purposes as well.

0:06:00.080 --> 0:06:00.240
<v Speaker 2>Well.

0:06:00.360 --> 0:06:02.520
<v Speaker 1>You can use it for vacation. It doesn't have to

0:06:02.600 --> 0:06:06.599
<v Speaker 1>only be business. But the vast majority of travel in

0:06:06.640 --> 0:06:09.840
<v Speaker 1>the private jet space is business, which is why the

0:06:10.880 --> 0:06:15.920
<v Speaker 1>use private jet and business aviation are very interchangeable because

0:06:15.920 --> 0:06:18.680
<v Speaker 1>it's oftentimes you know, those two things are often seeing

0:06:18.720 --> 0:06:19.280
<v Speaker 1>hand in hand.

0:06:19.480 --> 0:06:23.080
<v Speaker 2>Huh, really really interesting. Let's talk about the variety of

0:06:23.120 --> 0:06:28.039
<v Speaker 2>options that exist, starting with fractional ownership. What does that mean?

0:06:28.240 --> 0:06:30.480
<v Speaker 1>So there is a couple of different ways to fly private,

0:06:30.520 --> 0:06:32.240
<v Speaker 1>and if it's okay with you, Barry, I'm going to

0:06:32.279 --> 0:06:34.719
<v Speaker 1>take one half step back from there, and I'm going

0:06:34.760 --> 0:06:37.960
<v Speaker 1>to break down the four ways to fly private. I

0:06:37.960 --> 0:06:40.720
<v Speaker 1>actually wrote an article about this. It's at my website

0:06:40.760 --> 0:06:43.919
<v Speaker 1>Pressinhollan dot com. That's a free plug for myself. But

0:06:44.080 --> 0:06:46.440
<v Speaker 1>there are four ways to really fly private, and they

0:06:46.480 --> 0:06:49.799
<v Speaker 1>go from the least committal, the least long term committal,

0:06:50.040 --> 0:06:52.440
<v Speaker 1>to the most committal. So the least committal way to

0:06:52.520 --> 0:06:55.960
<v Speaker 1>fly private is to on demand charter. That means I'm

0:06:56.000 --> 0:06:58.320
<v Speaker 1>going to call up my charter broker and I'm going

0:06:58.400 --> 0:07:01.000
<v Speaker 1>to say I need to go from New York to Miami.

0:07:01.360 --> 0:07:03.840
<v Speaker 1>I need to go tomorrow, and I have four people.

0:07:04.160 --> 0:07:07.640
<v Speaker 1>You're going to make one transaction, you pay it, you

0:07:07.720 --> 0:07:10.520
<v Speaker 1>fly the trip tomorrow, and then you're done. No more commitment.

0:07:10.600 --> 0:07:12.600
<v Speaker 1>You don't ever have to fly private again if you

0:07:12.640 --> 0:07:15.240
<v Speaker 1>don't want to. Ad Hoc charter is kind of the

0:07:15.280 --> 0:07:19.360
<v Speaker 1>colloquial term ad hoc the Latin word for on demand, right,

0:07:19.840 --> 0:07:23.600
<v Speaker 1>So that's ad hoc charter. The second committal would be

0:07:23.840 --> 0:07:26.640
<v Speaker 1>a membership or a jet card, so that is kind

0:07:26.640 --> 0:07:30.840
<v Speaker 1>of the second phase. Those listeners of Bloomberg will be

0:07:30.880 --> 0:07:34.200
<v Speaker 1>familiar with Exojet, they'll be familiar with Vista Jet. If

0:07:34.200 --> 0:07:36.800
<v Speaker 1>you read any of the bond ratings, there's a lot

0:07:36.840 --> 0:07:39.720
<v Speaker 1>of memberships and jet card programs. You are pre paying

0:07:40.200 --> 0:07:42.920
<v Speaker 1>for an hour block. So let's say you put down

0:07:42.960 --> 0:07:45.040
<v Speaker 1>a five hundred thousand dollars deposit and that's going to

0:07:45.080 --> 0:07:48.000
<v Speaker 1>buy you x amount of hours on a certain aircraft type.

0:07:48.000 --> 0:07:50.520
<v Speaker 1>So that is the second, you know, second least committal.

0:07:50.600 --> 0:07:53.360
<v Speaker 1>There are you know, membership fees that are sometimes associated

0:07:53.400 --> 0:07:56.880
<v Speaker 1>with that, but you're not necessarily committing to one aircraft

0:07:56.880 --> 0:08:01.400
<v Speaker 1>type or something like that. The next committal is fractional ownership,

0:08:01.440 --> 0:08:03.640
<v Speaker 1>so you're buying in that was your original question. You're

0:08:03.680 --> 0:08:07.040
<v Speaker 1>buying into a program. This is net jets. This is flexjet,

0:08:07.160 --> 0:08:10.240
<v Speaker 1>this is airshare. There's a few regional providers that do

0:08:10.320 --> 0:08:14.080
<v Speaker 1>fractional program but you're buying a piece of an airplane,

0:08:14.640 --> 0:08:19.240
<v Speaker 1>not too terribly dissimilar to a timeshare, where you're buying

0:08:19.240 --> 0:08:21.920
<v Speaker 1>a portion of the airplane. You may never fly on

0:08:21.960 --> 0:08:24.800
<v Speaker 1>the tail that you own on, but you are committing

0:08:24.840 --> 0:08:28.920
<v Speaker 1>to that membership tier. So maybe you buy one sixteenth

0:08:29.280 --> 0:08:32.640
<v Speaker 1>of an aircraft that allows you fifty hours per year.

0:08:33.000 --> 0:08:36.240
<v Speaker 1>There's a monthly maintenance fee that's associated with it, and

0:08:36.280 --> 0:08:39.040
<v Speaker 1>then you pay per hour. You're committing to a program,

0:08:39.040 --> 0:08:42.040
<v Speaker 1>you're committing to a flute. The most committal way to

0:08:42.559 --> 0:08:44.880
<v Speaker 1>marry an airplane is to buy it, So this is

0:08:45.040 --> 0:08:47.000
<v Speaker 1>I own the airplane. Now you can do that a

0:08:47.040 --> 0:08:49.839
<v Speaker 1>couple different ways. Maybe me and Barry we both live

0:08:49.880 --> 0:08:52.360
<v Speaker 1>in New York and we want to share an airplane,

0:08:52.400 --> 0:08:54.920
<v Speaker 1>so we each go in fifty percent and we buy

0:08:54.920 --> 0:08:58.040
<v Speaker 1>the airplane. But you're only flying on that airplane. So

0:08:58.080 --> 0:09:01.360
<v Speaker 1>it's one tail, number one air after one set of pilots,

0:09:01.800 --> 0:09:04.160
<v Speaker 1>not as much membership. So that's kind of the range

0:09:04.280 --> 0:09:07.280
<v Speaker 1>to set the baseline of the different ways that you

0:09:07.280 --> 0:09:08.000
<v Speaker 1>can fly private.

0:09:08.280 --> 0:09:11.920
<v Speaker 2>So you wrote an interesting post that kind of explains

0:09:12.480 --> 0:09:15.840
<v Speaker 2>the cost differences between all those four things. And what

0:09:15.960 --> 0:09:19.960
<v Speaker 2>struck me is so fascinating was the least amount of

0:09:20.000 --> 0:09:24.560
<v Speaker 2>money you spend annually for something like an on demand

0:09:24.720 --> 0:09:28.160
<v Speaker 2>charter is going to be the most you spend on

0:09:28.280 --> 0:09:32.800
<v Speaker 2>an hourly basis, and vice versa. If you make a

0:09:32.880 --> 0:09:38.240
<v Speaker 2>big commitment annually, your hourly costs are the lowest. When

0:09:38.320 --> 0:09:42.200
<v Speaker 2>people are considering these things, is it simply a function of, Hey,

0:09:42.280 --> 0:09:44.559
<v Speaker 2>how many hours do you think you're flying this year?

0:09:44.600 --> 0:09:47.280
<v Speaker 2>Do you think it's fifty or one hundred hours? Is

0:09:47.280 --> 0:09:53.120
<v Speaker 2>that what informs those choices between jet cards, hourly charter memberships,

0:09:53.120 --> 0:09:54.240
<v Speaker 2>and fractional ownership.

0:09:54.600 --> 0:09:58.800
<v Speaker 1>Generally speaking, yes, when you talk about the first decision

0:09:58.880 --> 0:10:01.400
<v Speaker 1>that you're making, when you're talking about how am I

0:10:01.440 --> 0:10:04.520
<v Speaker 1>going to average my cost on an hourly basis, that

0:10:04.679 --> 0:10:07.520
<v Speaker 1>is generally the right framework to think about. Now, it

0:10:07.600 --> 0:10:10.360
<v Speaker 1>is not the hard and fast rule. I know plenty

0:10:10.400 --> 0:10:14.800
<v Speaker 1>of billionaires who fly flexjet fractional who can totally afford

0:10:14.840 --> 0:10:17.959
<v Speaker 1>their own aircraft, and they probably fly enough hours they

0:10:18.000 --> 0:10:19.800
<v Speaker 1>just don't want to deal with the hassle. Right So,

0:10:20.160 --> 0:10:23.319
<v Speaker 1>but generally speaking, if you're going to say which bucket

0:10:23.360 --> 0:10:27.199
<v Speaker 1>do I fit into private aviation. It's typically when you're

0:10:27.240 --> 0:10:29.679
<v Speaker 1>thinking about how much am I flying per year? If

0:10:29.720 --> 0:10:32.480
<v Speaker 1>you think about it strictly on a per hour that

0:10:32.559 --> 0:10:35.760
<v Speaker 1>I am going to per hour that I'm going to

0:10:35.800 --> 0:10:38.360
<v Speaker 1>actually fly, how much of my paying So let's say

0:10:38.679 --> 0:10:41.439
<v Speaker 1>let's set the benchmark ten thousand dollars per hour that's

0:10:41.440 --> 0:10:43.160
<v Speaker 1>going to be a super mid aircraft that's going to

0:10:43.200 --> 0:10:45.160
<v Speaker 1>be able to take you coast to coast. If you

0:10:45.200 --> 0:10:48.200
<v Speaker 1>were to own in a fractional program and you took

0:10:48.240 --> 0:10:51.719
<v Speaker 1>your purchase cost minus your resale costs, so there's a

0:10:51.760 --> 0:10:54.440
<v Speaker 1>depreciation factor there. You took in all of your monthly

0:10:54.480 --> 0:10:57.439
<v Speaker 1>costs and you average it out from time to time,

0:10:57.720 --> 0:10:59.920
<v Speaker 1>that will actually be lower on a per hour base.

0:11:00.520 --> 0:11:03.680
<v Speaker 1>But if you're only flying ten to fifteen hours per year,

0:11:04.280 --> 0:11:06.200
<v Speaker 1>you're going to have a lot of unused hours. You

0:11:06.280 --> 0:11:08.800
<v Speaker 1>may not actually get the full benefit for it. So

0:11:08.920 --> 0:11:11.880
<v Speaker 1>as you think about it, the typical breakpoint this is

0:11:12.600 --> 0:11:16.200
<v Speaker 1>generally speaking, depending on the aircraft type, and everybody's different,

0:11:16.320 --> 0:11:21.199
<v Speaker 1>but generally speaking, anything below one hundred hours you are

0:11:21.240 --> 0:11:24.199
<v Speaker 1>typically going to win in a on demand or a

0:11:24.280 --> 0:11:27.600
<v Speaker 1>charter program. Anything above one hundred hours you should start

0:11:27.600 --> 0:11:31.080
<v Speaker 1>considering fractional and then somewhere between one hundred and fifty

0:11:31.080 --> 0:11:34.280
<v Speaker 1>and two hundred hours per year personal flying, you should

0:11:34.360 --> 0:11:36.439
<v Speaker 1>consider whole aircraft ownership.

0:11:36.559 --> 0:11:39.719
<v Speaker 2>So I know, after we broadcast this, I'm going to

0:11:39.800 --> 0:11:44.400
<v Speaker 2>get some calls from some clients and some colleagues who

0:11:44.440 --> 0:11:47.360
<v Speaker 2>are going to ask, hey, I've put some couple of

0:11:47.360 --> 0:11:49.920
<v Speaker 2>million dollars away and make a couple of million dollars

0:11:49.960 --> 0:11:53.000
<v Speaker 2>a year. I'm tired of getting to the airport two

0:11:53.040 --> 0:11:56.800
<v Speaker 2>hours early and fighting through TSA. At least I don't

0:11:56.800 --> 0:11:59.480
<v Speaker 2>have to take my shoes off anymore. And they're going

0:11:59.520 --> 0:12:03.679
<v Speaker 2>to say, what's the best program for me? They do

0:12:03.760 --> 0:12:06.480
<v Speaker 2>some business flying, They do a bunch of a few

0:12:06.559 --> 0:12:10.200
<v Speaker 2>vacations a year every now and then they'll fly out.

0:12:10.320 --> 0:12:12.600
<v Speaker 2>Oh my kids in Purdue, let me go out to

0:12:12.679 --> 0:12:16.480
<v Speaker 2>the Midwest for someone like that? What sort of program

0:12:16.520 --> 0:12:19.320
<v Speaker 2>would you recommend? And I know I'm giving you broad

0:12:19.400 --> 0:12:21.560
<v Speaker 2>parameters and not anything very specific.

0:12:21.760 --> 0:12:24.719
<v Speaker 1>So I always suggest, if you are just getting into it,

0:12:24.880 --> 0:12:27.520
<v Speaker 1>an on demand charter program is going to be what

0:12:27.600 --> 0:12:30.760
<v Speaker 1>you want to do first, because you don't know what

0:12:30.800 --> 0:12:34.200
<v Speaker 1>your personal preferences are. You don't know if you like

0:12:34.280 --> 0:12:36.520
<v Speaker 1>flying on light jets or if you don't like flying

0:12:36.520 --> 0:12:38.560
<v Speaker 1>on light jets. You don't know if you want the

0:12:38.640 --> 0:12:41.880
<v Speaker 1>extra room, be able to stand up flat floor. There's

0:12:41.920 --> 0:12:44.560
<v Speaker 1>a lot of variables that go into that. So I

0:12:44.559 --> 0:12:48.960
<v Speaker 1>would say find a really good broker that has education forward.

0:12:49.120 --> 0:12:52.000
<v Speaker 1>Jets are moving from one place to another and not

0:12:52.040 --> 0:12:54.480
<v Speaker 1>necessarily between. It's not like a hub and smoke model

0:12:54.520 --> 0:12:57.240
<v Speaker 1>like the airlines, and so get a really good broker

0:12:57.280 --> 0:13:00.320
<v Speaker 1>that can help educate you on what it is you

0:13:00.400 --> 0:13:02.400
<v Speaker 1>might like and what it is you might not like.

0:13:02.760 --> 0:13:05.600
<v Speaker 1>Try a bunch of different flavors of aircraft before you

0:13:05.640 --> 0:13:09.079
<v Speaker 1>start committing to anything long term, because you just don't

0:13:09.120 --> 0:13:10.120
<v Speaker 1>know what you don't know.

0:13:10.520 --> 0:13:15.840
<v Speaker 2>So, since you mentioned different flavors of aircraft, let's talk

0:13:15.880 --> 0:13:21.520
<v Speaker 2>about a few. There's a Dessalt and Bombadare and Embryer

0:13:21.679 --> 0:13:25.320
<v Speaker 2>and Honda jets came out a couple of years ago.

0:13:25.360 --> 0:13:29.360
<v Speaker 2>They kind of surprised everybody. How broad is the range

0:13:29.400 --> 0:13:33.480
<v Speaker 2>of jets that are available either for charter or least

0:13:33.600 --> 0:13:34.280
<v Speaker 2>or membership.

0:13:34.440 --> 0:13:37.840
<v Speaker 1>Yeah. So when you're talking about flying in the backseat, right,

0:13:37.920 --> 0:13:39.880
<v Speaker 1>so we're going to leave the people who fly in

0:13:39.920 --> 0:13:43.160
<v Speaker 1>the front seat, which is another type of person. When

0:13:43.160 --> 0:13:46.680
<v Speaker 1>we look in the backseat It ranges from turboprops, which

0:13:46.720 --> 0:13:49.960
<v Speaker 1>is jet fuel that powers a propeller, so that's your

0:13:50.040 --> 0:13:53.560
<v Speaker 1>King Airs, your Pilatus PC twelves. So that is kind

0:13:53.559 --> 0:13:55.640
<v Speaker 1>of the call it the bottom end of the market.

0:13:55.640 --> 0:13:57.440
<v Speaker 1>You're gonna have the least amount of range, the least

0:13:57.440 --> 0:13:59.200
<v Speaker 1>amount of speed, but it's also going to be the

0:13:59.200 --> 0:14:02.400
<v Speaker 1>most cost of wheels up. If you ever watch college

0:14:02.400 --> 0:14:05.400
<v Speaker 1>game day and you remember seeing, oh, the one that

0:14:05.480 --> 0:14:07.199
<v Speaker 1>has the two propellers on the side, that's a king

0:14:07.240 --> 0:14:09.520
<v Speaker 1>Air three fifty for instance. So that is kind of

0:14:09.520 --> 0:14:11.559
<v Speaker 1>the bottom end of the range. You then have very

0:14:11.640 --> 0:14:13.920
<v Speaker 1>light jets, which is going to take two to three passengers.

0:14:13.960 --> 0:14:17.080
<v Speaker 1>That's very light jet, qualifies as the Honda Jet the

0:14:17.120 --> 0:14:20.840
<v Speaker 1>citation M two. Even the Suius Vision Jet, which is

0:14:21.280 --> 0:14:23.120
<v Speaker 1>kind of in a league of its own as a

0:14:23.120 --> 0:14:25.840
<v Speaker 1>single engine jet, is in the very light jet category.

0:14:25.960 --> 0:14:27.640
<v Speaker 1>You then have light jets, which is going to be

0:14:27.840 --> 0:14:32.160
<v Speaker 1>Emperor Phenom three hundred, the citation CJ three and CJ four.

0:14:32.520 --> 0:14:36.440
<v Speaker 1>Light jets are really great for regional travel, not as

0:14:36.440 --> 0:14:38.160
<v Speaker 1>great for coast to coast You're going to have to

0:14:38.200 --> 0:14:40.640
<v Speaker 1>stop at some point. Then you have so mid size

0:14:40.680 --> 0:14:43.800
<v Speaker 1>the citation XLS that's going to be you know, again

0:14:43.840 --> 0:14:46.200
<v Speaker 1>regional travel. You're not quite going to get New York

0:14:46.280 --> 0:14:48.440
<v Speaker 1>to San Francisco, but you're going to get pretty close.

0:14:48.800 --> 0:14:51.000
<v Speaker 1>Then you have the super mid sized jet, which is

0:14:51.080 --> 0:14:52.840
<v Speaker 1>kind of like, you know, the differ between large and

0:14:52.880 --> 0:14:55.880
<v Speaker 1>extra large shirts. It's like, oh, that was lazy. Super

0:14:55.920 --> 0:14:59.080
<v Speaker 1>mid jets is a great example super mid jets. The

0:14:59.200 --> 0:15:03.120
<v Speaker 1>Challenger three one hundred, three fifty thirty five hundred is

0:15:03.160 --> 0:15:06.960
<v Speaker 1>going to qualify in that the citation latitude, the citation longitude.

0:15:07.640 --> 0:15:10.040
<v Speaker 1>The latitude cannot get coast to coast, but the citation

0:15:10.200 --> 0:15:13.040
<v Speaker 1>longitude can. That's going to be your super mid size.

0:15:13.080 --> 0:15:15.680
<v Speaker 1>Those are typically going to have a flat floor. They'll

0:15:15.680 --> 0:15:20.360
<v Speaker 1>see around eight people at max capacity, and that's going

0:15:20.400 --> 0:15:22.200
<v Speaker 1>to be the super mid sized jet. Is the first

0:15:22.200 --> 0:15:24.440
<v Speaker 1>time we're going to unlock that New York to San Francisco,

0:15:24.480 --> 0:15:26.760
<v Speaker 1>New York to LA trip. Then you start getting into

0:15:26.840 --> 0:15:29.560
<v Speaker 1>the large cabin. So when you get into large cabin,

0:15:29.600 --> 0:15:32.600
<v Speaker 1>you have the Challenger six o four six fifty uh

0:15:32.800 --> 0:15:36.000
<v Speaker 1>six five six fifty. You have the Falcon two thousand,

0:15:36.080 --> 0:15:38.680
<v Speaker 1>which kind of feeds on that super mid size to

0:15:38.920 --> 0:15:39.400
<v Speaker 1>large cabin.

0:15:39.440 --> 0:15:41.680
<v Speaker 2>Can you take those New York to London, New York

0:15:41.760 --> 0:15:42.360
<v Speaker 2>to Paris.

0:15:42.640 --> 0:15:45.880
<v Speaker 1>You can get New York to London depending on which

0:15:45.880 --> 0:15:48.000
<v Speaker 1>way the wind is blowing and how new it is.

0:15:48.200 --> 0:15:51.280
<v Speaker 2>Well, that's a little tight. And my assumption is as

0:15:51.320 --> 0:15:54.920
<v Speaker 2>you go from small light to mid to super mid

0:15:55.000 --> 0:15:58.680
<v Speaker 2>to large, everything not just the cost of the jet,

0:15:58.760 --> 0:16:01.760
<v Speaker 2>but the insurance, the main and it's the hangar, the pilots.

0:16:02.160 --> 0:16:05.800
<v Speaker 2>All of this scales up dramatically as you go from

0:16:05.840 --> 0:16:10.360
<v Speaker 2>flying New York to DC versus San Francisco to Hong Kong.

0:16:10.920 --> 0:16:14.560
<v Speaker 1>Yeah, it scales up proportionately. As you get larger in

0:16:14.600 --> 0:16:18.160
<v Speaker 1>the aircraft. You start having higher pilot cost you start

0:16:18.200 --> 0:16:21.520
<v Speaker 1>having higher insurance costs, you have higher fuel burn on

0:16:21.560 --> 0:16:24.600
<v Speaker 1>a per hour basis. So it does exponentially get larger.

0:16:25.280 --> 0:16:29.640
<v Speaker 1>That's not to say, though, that people automatically enter the

0:16:29.920 --> 0:16:32.960
<v Speaker 1>light jet category the turboprop first. There is a vanity

0:16:33.000 --> 0:16:37.080
<v Speaker 1>piece to private aviation. They always say that the most

0:16:37.080 --> 0:16:40.560
<v Speaker 1>expensive part of the plane is the window. And that's

0:16:40.560 --> 0:16:42.360
<v Speaker 1>because when the shade is up and you land at

0:16:42.360 --> 0:16:44.280
<v Speaker 1>the FBO, you look out and you say, ooh, I

0:16:44.360 --> 0:16:47.480
<v Speaker 1>like that one, and so you're tempted to kind of

0:16:47.480 --> 0:16:48.000
<v Speaker 1>step up.

0:16:48.200 --> 0:16:52.320
<v Speaker 2>Really interesting. My last question how has the technology changed

0:16:52.320 --> 0:16:54.520
<v Speaker 2>private aviation in recent years.

0:16:54.920 --> 0:16:57.440
<v Speaker 1>Yeah, so there's been a lot of software that's come

0:16:57.480 --> 0:16:59.960
<v Speaker 1>to market over the last call it ten to fifteen

0:17:00.080 --> 0:17:03.760
<v Speaker 1>years that have really impacted the way in which private

0:17:03.800 --> 0:17:08.879
<v Speaker 1>flyers are interfacing with kind of the administrative layer of

0:17:08.960 --> 0:17:14.160
<v Speaker 1>private aviation because it is such a tax complicated factor.

0:17:14.560 --> 0:17:17.439
<v Speaker 1>There is tracking tools out there, there is services that

0:17:17.520 --> 0:17:20.960
<v Speaker 1>will actually help you make sure. There's maintenance tracking softwarees.

0:17:21.040 --> 0:17:26.960
<v Speaker 1>There's predictive maintenance tracking softwares. There's logbooks scanning aviation in general.

0:17:27.080 --> 0:17:30.600
<v Speaker 1>I know this is shocking, but aviation in general lags

0:17:30.640 --> 0:17:33.840
<v Speaker 1>from a technological standpoint because of how conservative it is.

0:17:34.240 --> 0:17:38.000
<v Speaker 1>So paper logbooks are still a thing. There are still

0:17:38.200 --> 0:17:41.520
<v Speaker 1>maintenance records that are held in paper in a fireproof

0:17:41.600 --> 0:17:45.120
<v Speaker 1>safe at the FBO. That's like still a very common thing.

0:17:45.400 --> 0:17:49.080
<v Speaker 1>There has been a shift towards technology and aviation when

0:17:49.080 --> 0:17:53.200
<v Speaker 1>you look at private aviation, though. The challenge for software entrepreneurs.

0:17:53.240 --> 0:17:56.280
<v Speaker 1>I get dms all the time on x to say, hey,

0:17:56.280 --> 0:17:59.320
<v Speaker 1>I want to build XYZ software and revolutionize the market.

0:17:59.560 --> 0:18:02.240
<v Speaker 1>The problem is in the grand scheme of things, it's

0:18:02.320 --> 0:18:03.399
<v Speaker 1>not that big.

0:18:03.520 --> 0:18:07.760
<v Speaker 2>So people listening to this conversation are thinking themselves, Hey

0:18:07.920 --> 0:18:11.960
<v Speaker 2>I'd like to fly private ballpark figures. How much money

0:18:12.040 --> 0:18:15.720
<v Speaker 2>you need to have to make this really a worthwhile experience?

0:18:16.160 --> 0:18:20.320
<v Speaker 1>So generally speaking, it's two million dollars in net income, right,

0:18:20.359 --> 0:18:22.840
<v Speaker 1>so that's kind of cash flow to you, and twenty

0:18:22.840 --> 0:18:26.119
<v Speaker 1>million dollar net worth before you start chartering on a

0:18:26.160 --> 0:18:30.320
<v Speaker 1>regular basis. So that's you know, probably vacations, that's probably

0:18:30.359 --> 0:18:33.080
<v Speaker 1>some business trips. That's not you know, you're not pedal

0:18:33.160 --> 0:18:35.080
<v Speaker 1>to the metal. Never have seen the inside of a

0:18:35.080 --> 0:18:38.200
<v Speaker 1>commercial airport again, but you're seeing it less and less.

0:18:38.200 --> 0:18:40.760
<v Speaker 1>At two million dollars of income and twenty million dollars

0:18:40.800 --> 0:18:44.320
<v Speaker 1>in net worth before you start thinking about buying a

0:18:44.520 --> 0:18:46.439
<v Speaker 1>mid sized jet where you sit in the back and

0:18:46.480 --> 0:18:49.280
<v Speaker 1>you have pilots and all of that. The number was

0:18:49.320 --> 0:18:53.160
<v Speaker 1>between ten and twenty million of net income and around

0:18:53.280 --> 0:18:55.720
<v Speaker 1>one hundred to two hundred million dollars of net worth.

0:18:55.760 --> 0:19:00.560
<v Speaker 1>Now that includes privately held companies, that includes my operating

0:19:00.600 --> 0:19:03.560
<v Speaker 1>company has been marked to market at two hundred million dollars,

0:19:03.880 --> 0:19:05.840
<v Speaker 1>and then I'm starting to think about an aircraft. But

0:19:05.920 --> 0:19:09.119
<v Speaker 1>that is generally speaking, now, that is not the rule.

0:19:09.960 --> 0:19:12.719
<v Speaker 1>In my day job, I look at people's financials and

0:19:12.800 --> 0:19:16.720
<v Speaker 1>help them place debt for aircraft purchases. I will tell

0:19:16.720 --> 0:19:19.560
<v Speaker 1>you that that number is not a hard and fast rule.

0:19:19.880 --> 0:19:22.560
<v Speaker 1>It is a good rule of thumb. But for everybody

0:19:22.600 --> 0:19:24.480
<v Speaker 1>it's different, right. It may be a higher net worth

0:19:24.520 --> 0:19:26.479
<v Speaker 1>and maybe you're a lower cash flow. Maybe you're a

0:19:26.520 --> 0:19:29.399
<v Speaker 1>really cash flow person and this is really what you

0:19:29.440 --> 0:19:32.760
<v Speaker 1>want to do. But those that's kind of a good general,

0:19:33.200 --> 0:19:36.480
<v Speaker 1>you know, general term to start looking at kind of

0:19:36.480 --> 0:19:38.400
<v Speaker 1>midsize jets and then as you kind of scale up,

0:19:38.800 --> 0:19:41.240
<v Speaker 1>you're really not buying a brand new G seven hundred

0:19:41.359 --> 0:19:43.440
<v Speaker 1>until you're knocking on the billion dollar market.

0:19:43.960 --> 0:19:47.080
<v Speaker 2>So to wrap up, if you're doing pretty well income

0:19:47.119 --> 0:19:49.639
<v Speaker 2>wise and have a couple of shekels put away, you

0:19:49.680 --> 0:19:52.080
<v Speaker 2>don't have to go out and drop tens of millions

0:19:52.160 --> 0:19:55.439
<v Speaker 2>of dollars buying your own jet. You could do hourly charter,

0:19:55.800 --> 0:19:58.600
<v Speaker 2>you could do fractional ownership, or you could do one

0:19:58.640 --> 0:20:02.239
<v Speaker 2>of the jet memor membership cards that allow you to

0:20:02.400 --> 0:20:06.639
<v Speaker 2>spend less time in commercial airports and more time getting

0:20:06.680 --> 0:20:10.440
<v Speaker 2>to where you go quicker, faster, and more comfortably. I'm

0:20:10.480 --> 0:20:18.520
<v Speaker 2>Barry rid Helts. You're listening to Bloomberg's at the Money